[cr]

What’s so bad about prices declining? Most people here are either for it or expect it even if they lose some equity. Those avidly against it we tend to drive away, so I am just posing the question: so what if prices fall 50%? They went up 2-300% or more in some places. Even if realistic circumstances could sustain that why wouldn’t we want prices to fall?

Equity isn’t wealth until the house is sold, and that requires someone with MORE money who can afford your house.

In theory buyers, banks, and investors should be fine no matter how low prices go, but skyrocketing defaults leave buyers and lenders facing the consequences of poor business, deception, and outright lying. That’s rough, but if I placed my life savings on red 7 and lost, should the government have to give me my money back?

People are against prices falling because of the sense of entitlement derived from abnormal appreciation. I think people felt like they deserved to be millionaires when their 3br 2ba 1500sq ft house went from $400,000 to $1,000,000 in value, as if they earned it. They didn’t do anything!!

I think “the everyone wants to live here” claim is a cop out. Even the best cities have bad parts where people with money won’t live. SoCal, from SD to Santa Barabara is a great place to live, but there are plenty of equally nice places across the US, and other countries. International money will do a little, but as soon at the values drop they’ll bow out too.

Outside the dollar eqauling the peso, or incomes doubling next year, I can’t think of anything that will sustain these prices.

The past bubbles have overcorrected, and I hope this one does too. After a few years of correction, as suggested we think, it will be a positive. Those who foreclose, may actually be able to afford a house again, and those who are priced out or weren’t foolish enough to get into an overpriced market may too.

In the end, all this will be is a more painful way to have gotten to the historical average increase in prices. The result is people will be able to afford houses with a fixed loan. Now that’s just crazy!

[cr]

What’s so bad about prices declining? Most people here are either for it or expect it even if they lose some equity. Those avidly against it we tend to drive away, so I am just posing the question: so what if prices fall 50%? They went up 2-300% or more in some places. Even if realistic circumstances could sustain that why wouldn’t we want prices to fall?

Equity isn’t wealth until the house is sold, and that requires someone with MORE money who can afford your house.

In theory buyers, banks, and investors should be fine no matter how low prices go, but skyrocketing defaults leave buyers and lenders facing the consequences of poor business, deception, and outright lying. That’s rough, but if I placed my life savings on red 7 and lost, should the government have to give me my money back?

People are against prices falling because of the sense of entitlement derived from abnormal appreciation. I think people felt like they deserved to be millionaires when their 3br 2ba 1500sq ft house went from $400,000 to $1,000,000 in value, as if they earned it. They didn’t do anything!!

I think “the everyone wants to live here” claim is a cop out. Even the best cities have bad parts where people with money won’t live. SoCal, from SD to Santa Barabara is a great place to live, but there are plenty of equally nice places across the US, and other countries. International money will do a little, but as soon at the values drop they’ll bow out too.

Outside the dollar eqauling the peso, or incomes doubling next year, I can’t think of anything that will sustain these prices.

The past bubbles have overcorrected, and I hope this one does too. After a few years of correction, as suggested we think, it will be a positive. Those who foreclose, may actually be able to afford a house again, and those who are priced out or weren’t foolish enough to get into an overpriced market may too.

In the end, all this will be is a more painful way to have gotten to the historical average increase in prices. The result is people will be able to afford houses with a fixed loan. Now that’s just crazy!

[cr]

With values dropping I bet most people who bought at a teaser rate within the last 3 years are upside down, unless they had at least 5% down or took all their equity from a previous home. So even if rates go back to 2% or even 1%, it won’t make an iota of difference to someone who can’t refi cover the original loan, right? Unless the bank eats the equity loss, banks aren’t in business for charity, and now the buyer has to qualify under new standards.

Point being lower rates will do little to no good, and in the bigger picture will only cause more problems: i.e. devalued dollar.

Lowering rates is throwing gasoline on the mortgage fire. It’s just going to have to burn out. Unfortunately for most, the fire is still spreading.

[cr]

With values dropping I bet most people who bought at a teaser rate within the last 3 years are upside down, unless they had at least 5% down or took all their equity from a previous home. So even if rates go back to 2% or even 1%, it won’t make an iota of difference to someone who can’t refi cover the original loan, right? Unless the bank eats the equity loss, banks aren’t in business for charity, and now the buyer has to qualify under new standards.

Point being lower rates will do little to no good, and in the bigger picture will only cause more problems: i.e. devalued dollar.

Lowering rates is throwing gasoline on the mortgage fire. It’s just going to have to burn out. Unfortunately for most, the fire is still spreading.

[cr]

With values dropping I bet most people who bought at a teaser rate within the last 3 years are upside down, unless they had at least 5% down or took all their equity from a previous home. So even if rates go back to 2% or even 1%, it won’t make an iota of difference to someone who can’t refi cover the original loan, right? Unless the bank eats the equity loss, banks aren’t in business for charity, and now the buyer has to qualify under new standards.

Point being lower rates will do little to no good, and in the bigger picture will only cause more problems: i.e. devalued dollar.

Lowering rates is throwing gasoline on the mortgage fire. It’s just going to have to burn out. Unfortunately for most, the fire is still spreading.

[cr]

I agree HLS. The psychological effects are just starting to take root. The public is only starting to realize what most here have been saying for years now. They may not expect a 50% correction like some do, at least in some areas. They probably expect 10-15%, but the game is over.

The damage is done, and things are different this time. This time, consumers have no savings, are maxed out on credit, both parents are already working, loans are getting harder to get by the day, inventories and foreclosures are at all time highs, the negative effect on jobs is just starting, and so on and so on. All in all I’d say it’s far worse than the last downturn, both in scale and in factors contributing to the decline.

As these factors take hold people will be more hesitant to buy, drive prices further, and if it’s anything like the last two downturns, prices may go lower than they were when this started 4-5 years ago. That is of course unless incomes across the board double in the next 6 months. I forget, did that happen last time?

[cr]

I agree HLS. The psychological effects are just starting to take root. The public is only starting to realize what most here have been saying for years now. They may not expect a 50% correction like some do, at least in some areas. They probably expect 10-15%, but the game is over.

The damage is done, and things are different this time. This time, consumers have no savings, are maxed out on credit, both parents are already working, loans are getting harder to get by the day, inventories and foreclosures are at all time highs, the negative effect on jobs is just starting, and so on and so on. All in all I’d say it’s far worse than the last downturn, both in scale and in factors contributing to the decline.

As these factors take hold people will be more hesitant to buy, drive prices further, and if it’s anything like the last two downturns, prices may go lower than they were when this started 4-5 years ago. That is of course unless incomes across the board double in the next 6 months. I forget, did that happen last time?

[cr]

I agree HLS. The psychological effects are just starting to take root. The public is only starting to realize what most here have been saying for years now. They may not expect a 50% correction like some do, at least in some areas. They probably expect 10-15%, but the game is over.

The damage is done, and things are different this time. This time, consumers have no savings, are maxed out on credit, both parents are already working, loans are getting harder to get by the day, inventories and foreclosures are at all time highs, the negative effect on jobs is just starting, and so on and so on. All in all I’d say it’s far worse than the last downturn, both in scale and in factors contributing to the decline.

As these factors take hold people will be more hesitant to buy, drive prices further, and if it’s anything like the last two downturns, prices may go lower than they were when this started 4-5 years ago. That is of course unless incomes across the board double in the next 6 months. I forget, did that happen last time?

[cr]

Don’t forget though, he got to be on TV!!!

These shows are just starting to feel the effects of the bust. Most will be gone in a year.

[cr]

Don’t forget though, he got to be on TV!!!

These shows are just starting to feel the effects of the bust. Most will be gone in a year.

[cr]

Don’t forget though, he got to be on TV!!!

These shows are just starting to feel the effects of the bust. Most will be gone in a year.

[cr]

To better answer the topic question, you’d have to define panic. Is it a run on the banks? Is it that everyone wants to sell and no one wants to buy? Does everyone buy/sell their stocks, and put the $ in a mattress?

One thing I’ve noticed from past cycles, and the past few years, is it always gets worse than generally expected. People’s expectations are typically based on what just happened, not what happened the last cycle and not what the data suggests, which is where us Piggingtonians differ. There’s another thread on here with the article that outlines the sentiment during the ’89-’96 downturn, and you could all but replace the years and averages with current ones.

I think the recent past sets an expectation of leveling prices, but we know they will drop more than most expect. As they do I think people will panic. But panic and do what? My first thought is they won’t buy. As demand wanes, prices/values will drop more. Throw into the mix the effect of rising foreclosures, tightened standards, and the reamining new construction that is still finishing, prices have nowhere to go but down.

20% decline? Maybe in a year from now, and maybe again a year from then, but it will vary from area to area, and buyer to buyer.

I believe most people won’t want anything to do with housing as an investment a year from now and several years thereafter. People will start saying “wait to buy, prices are falling.” I think many of the flippers, investors, or shoddy agents/brokers affected by this will panic, and move onto new careers/investments. For the homeowner it depends if they can afford their home. For the renter, I think they start to feel more comfortable not owning, and delay a decision to buy even longer.

[cr]

To better answer the topic question, you’d have to define panic. Is it a run on the banks? Is it that everyone wants to sell and no one wants to buy? Does everyone buy/sell their stocks, and put the $ in a mattress?

One thing I’ve noticed from past cycles, and the past few years, is it always gets worse than generally expected. People’s expectations are typically based on what just happened, not what happened the last cycle and not what the data suggests, which is where us Piggingtonians differ. There’s another thread on here with the article that outlines the sentiment during the ’89-’96 downturn, and you could all but replace the years and averages with current ones.

I think the recent past sets an expectation of leveling prices, but we know they will drop more than most expect. As they do I think people will panic. But panic and do what? My first thought is they won’t buy. As demand wanes, prices/values will drop more. Throw into the mix the effect of rising foreclosures, tightened standards, and the reamining new construction that is still finishing, prices have nowhere to go but down.

20% decline? Maybe in a year from now, and maybe again a year from then, but it will vary from area to area, and buyer to buyer.

I believe most people won’t want anything to do with housing as an investment a year from now and several years thereafter. People will start saying “wait to buy, prices are falling.” I think many of the flippers, investors, or shoddy agents/brokers affected by this will panic, and move onto new careers/investments. For the homeowner it depends if they can afford their home. For the renter, I think they start to feel more comfortable not owning, and delay a decision to buy even longer.

[cr]

Okay, okay, conspiracy theories are just that, theories. You have to wonder though if things like this aren’t strings being pulled by big brother.

But this thread needs some humor, and given that fortune seems to favor the reckless these days, I have decided to revise my home buying strategy, that will simultaneously be research to answer my own questions:

– Buy 4 houses loans all at the exact same time so the credit checks don’t show
– One a 15yr fixed, one an IO, one an ARM, and one a NEG AM
– Refinance them as they reset, take out the equity I will surely have (we hit bottom, right?)
– Buy a vacation home, take a vacation, buy a yellow H2, BMW, and a 92″ plasma screen for my yellow H2
– Quit working, and open a franchise
– File for bankruptcy, hire a lawyer, sue for predatory lending, and sit in my 4 houses while miles or red tape unfold, and all the lenders give me money to pay for the lifestyle I couldn’t otherwise afford.

Ah, the American Dream.

*DISCLAIMER*
the actions, words, opinions, heresay, and theresay represented in this post are fictional. Any correlation to real persons, places, or things, living, dead, or re-incarnated are striclty coincidental and should not be taken as slandering, offense, flaming, or grounds for legal action.

[cr]

Okay, okay, conspiracy theories are just that, theories. You have to wonder though if things like this aren’t strings being pulled by big brother.

But this thread needs some humor, and given that fortune seems to favor the reckless these days, I have decided to revise my home buying strategy, that will simultaneously be research to answer my own questions:

– Buy 4 houses loans all at the exact same time so the credit checks don’t show
– One a 15yr fixed, one an IO, one an ARM, and one a NEG AM
– Refinance them as they reset, take out the equity I will surely have (we hit bottom, right?)
– Buy a vacation home, take a vacation, buy a yellow H2, BMW, and a 92″ plasma screen for my yellow H2
– Quit working, and open a franchise
– File for bankruptcy, hire a lawyer, sue for predatory lending, and sit in my 4 houses while miles or red tape unfold, and all the lenders give me money to pay for the lifestyle I couldn’t otherwise afford.

Ah, the American Dream.

*DISCLAIMER*
the actions, words, opinions, heresay, and theresay represented in this post are fictional. Any correlation to real persons, places, or things, living, dead, or re-incarnated are striclty coincidental and should not be taken as slandering, offense, flaming, or grounds for legal action.

[Author]

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